A few weeks ago, I had the opportunity to speak with Pervinder Johar, CEO of Blume Global. During our conversation, Pervinder and I spoke about the changing nature of supply chain management, especially in the face of the ongoing Covid pandemic. I asked Pervinder to give his insights on a few key points. First, what is the current state of supply chain technology? Second, what market trends are emerging? Third, what is the next stage of the supply chain technology evolution? Fourth, what is the network effect and how can it enhance supply chain management operations? Fifth, where do digital twins fit into supply chain management? And finally, what are you seeing in terms of supply chain sustainability?
Below are some key points from our discussion as well as the full video interview.
The State of Supply Chain Technology
Supply chain has become a household name in the last 18 months. Many global supply chains had single points of failure; when there were disruptions, the impact was felt immediately. In the first half of 2020, there was a lot of uncertainty and it was difficult to figure out demand. While demand for essential goods spiked, there were a lot of unknowns around demand for other items. E-commerce surged at this time, putting more strain on supply chains and the ongoing capacity crunch.
In the second half of 2020, demand again spiked again. This shift in demand was due to the fast that people were not spending money on travel or going out. Instead, it went into discretionary spending which meant demand spiked and supply chains had issues reacting to the capacity issue.
The pandemic served as a wake-up call for companies that were not digital to begin with. There are basically two types of supply chains: digital and non-digital. The companies with a digital supply chain were able to easily shift to a remote environment. For those that without a digital supply chain, they were left scrambling to find laptops to enable remote work.
Market Trends
Right now, the mega trend is that the focus is on inbound supply chains rather than outbound. From a technology standpoint, outbound supply chains, including last mile delivery, were well equipped to manage it. This is due to the fact that there are still two main issues on the inbound side.
- There is a shortage of semiconductors around the world. This has impacted manufacturing operations as factories cannot run due to the component shortage. The automotive market in particular has been hit hard.
- Transportation capacity remains an issue. It is hard to move goods when there are so many vessels waiting to dock at ports. The result is that goods cannot be processed and moved along the supply chain.
Supply Chain Technology Evolution
The digital supply chain is a trend that is here to stay, and most companies are not fully digital. About 90 percent of businesses involved in supply chain are small to medium enterprises. So how do you make sure every participant in the supply chain is digital, not just the largest? Every aspect of the entire supply chain network needs to be digital.
Looking forward, artificial intelligence and machine learning are helping with automation. These technologies can help in other ways as well. There is an ongoing labor shortage, from bother a driver and warehouse worker perspective. From a technology standpoint, AI and ML can help here, as an integrated digital platform can make better use of available labor.
The Network Effect
The focus has been on the consumer side, as it has already moved to a network platform. DoorDash, for example, connects restaurants with drivers for home delivery. It does not employ drivers or own any restaurants; it is the network that connects all parties and makes it possible for us to order food.
Now there needs to be a focus on the business side to connect all types of players in the supply chain. When talking about a network platform, you need to know how many types of participants need to be included and how to get them all on the platform. So much technology is still siloed. These siloes need to be able to work together for a supply chain to work effectively. The network can make this possible.
Digital Twins in the Supply Chain
Digital twins help companies to understand how the supply chain work. A lot of people think of it from their specific supply chain only, but there is more to think about. Companies need to look at the bigger supply chain picture, including knowing where the ocean terminals are, where the rail ramps are, and how things move through them. It is not about modeling in a static form; it is about knowing in real time what is going on at each of these nodes. Digital twins are a real-life simulation of how the supply chain is performing.
Supply Chain Sustainability
When Blume was founded, it set a sustainability goal. Namely, how to make global supply chains more sustainable. Blume was the first technology company which became carbon neutral. While it took a year to determine, it wanted to understand what their carbon footprint was and how to offset it.
For most supply chain companies, it is hard to figure out what their carbon footprint is. On the transportation side, companies have generally made decisions based on either speed or cost. There is another parameter that companies should look at: carbon footprint. This way the environmental cost becomes part of the overall transportation management process. There is an environmental cost associated with speed, and companies need to look at how to prioritize the environment as well as customer preferences.
About Blume Global
Founded in 1994 as Rez-1. The company was rebranded to Blume Global in 2018. This private company is headquartered in the San Francisco Bay area. Blume Global provides both transportation execution and supply chain collaboration network solutions.
The Blume Digital Platform connects over 1,000 terminals; depots; and rail ramps to over 10,000 motor carriers; 300 intermodal marketing companies; and all US Class One railroads in 130 nations. Blume Global connects retail, hi-tech, food and beverage and apparel companies in addition to a carrier network that includes ocean, airfreight, parcel, railroads and truckload and less-than-truckload drayage.
